(Recasts with fall in share price; adds source confirming report; adds backgroun; updates share prices)
By Diane Bartz
June 9 (Reuters) - Shares of drugstore chain Rite Aid Corp fell sharply on Friday on a report that indicated its proposed merger with Walgreens Boots Alliance Inc was having trouble winning U.S. antitrust approval.
Rite Aid's share price dropped as much as 16.7 percent after the Capital Forum reported that the Federal Trade Commission's staff was prepared to recommend that the agency file a lawsuit to stop the deal. Shares of Walgreens were little changed.
A final decision on a lawsuit would be made by FTC acting Chair Maureen Ohlhausen, a Republican, and Commissioner Terrell McSweeny, a Democrat.
A source close to the deal confirmed the report to Reuters and said that agency staff has asked companies and groups concerned about the deal for depositions and affidavits that could be used in a lawsuit aimed at stopping it.
Walgreens, Rite Aid and the FTC all declined comment.
Walgreens has 8,175 stores, and Rite Aid has about 4,600. CVS Health Corp is the nation's largest drugstore chain with more than 9,600 stores.
Walgreens has indicated it may sell as many as 1,200 stores to smaller chain Fred's as a way to resolve antitrust problems under the proposed merger.
David Balto, a former FTC official, said the agency would have a "compelling case" if it sued to stop the deal and noted that the agency had stopped other big transactions, including a bid by Staples Inc to buy Office Depot Inc, which was scrapped last year.
Rite Aid and Walgreens have been waiting for FTC approval since Walgreens made its initial offer in October 2015.
In that time, the closing date of the deal has been postponed repeatedly and the offer price has been reduced to $6.50-$7.00 per share, down from $9.
In late afternoon trading on Friday, shares of Rite Aid were down 13.6 percent at $3.05, while Walgreens shares were off 0.4 percent at $81.11
The deal would help Walgreens widen its U.S. footprint and negotiate for lower drug costs. (Reporting by Diane Bartz in Washington; Additional reporting by Sruthi Ramakrishnan in Bengaluru; Editing Lisa Von Ahn and Leslie Adler)